Prepaid cards are growing in popularity as a means of providing payment. A prepaid card may be an open-loop branded card such as a Visa™ or MasterCard™, or may be merchant-branded, such as a gift certificate for a specific store. Prepaid cards provide several advantages to consumers such as convenience, security, and easy management.
However, fraud involving prepaid cards is an issue for consumers, merchants, and card issuers. Unauthorized persons may use stolen or misappropriated credit card information to buy prepaid cards. This allows unauthorized persons to quickly put large charges on credit cards. Even though a credit card may be canceled when the unauthorized charges are discovered, the prepaid cards bought with the stolen credit card information can still be used to make purchases after the credit card is canceled, prolonging the damage associated with the fraud.
In addition, prepaid cards may be used to perform money laundering. For example, a legitimate credit card may be monitored by law enforcement agencies. However, if a prepaid card is bought using the legitimate credit card and used for illicit activity, such activity may be concealed. Thus, prepaid cards may be used to obfuscate the use of funds.
Embodiments of the present invention address these problems and other problems individually and collectively.